Individual Mandate Upheld in Federal Court

A federal appeals court has ruled that Congress acted within its Constitutional authority when it passed the Patient Protection and Affordable Care Act into law, last year. Importantly, the three judge panel voted two to one, with one Republican nominee and former Scalia law clerk in the majority, that the individual mandate is in line with Congressional authority to regulate interstate commerce.

It is the first time a Republican judge has sided with the individual mandate, in the ongoing wave of legal challenges to the law, and many conservatives see the ruling as a setback. Others say the challenge to the individual mandate will continue until it reaches the Supreme Court. But critics of that view warn there may be unintended consequences of pushing the challenge too far, consequences which might require more, not less, government intervention.

The individual mandate, of course, like the “public option”, started out as a Republican idea meant to accomplish two main goals: to give the insurance industry a cushion against some of the more severe stresses of the marketplace, and to expand coverage without replacing private insurance with a new blanket government-run single-payer system.

In both instances, the intention was to contain government intervention in the private markets, and allow insurers to extract the better profits, at a volume and of a kind closer to what they prefer. If the individual mandate is successfully challenged as an unconstitutional mandate to purchase a commercial product, in an environment in which Congress has the authority to enact such regulatory measures, Congress would be forced to finance coverage for any consumers who might find themselves in the insurance affordability “doughnut hole”.

That would mean one of two things: a robust public option to complement low-cost private insurance policies on a coverage exchange, or a requirement that private insurers meet universal coverage cost requirements, at their own expense. That could mean the president will get the full, original blueprint for health insurance reform, including a public option on the low-cost exchanges, after all.

By far the more useful and meaningful aspect of the Patient Protection and Affordable Care Act is the ban on discrimination based on health conditions. Such discrimination not only costs tens of thousands of lives and billions in taxpayer dollars, each year, it distorts the insurance industry’s business model and props up unsustainable practices by biasing healthcare insurance companies against paying for healthcare.

The legal argument may come to that: the question of whether there is a commercial right, in the Constitution, to sell health insurance but be structurally organized to avoid providing it. That is an argument the industry does not want to have and could likely not win.

In fact, it is unlikely the justices would even accept such an argument for hearings, unless they saw an overriding need to rule on that point to clarify related and pending disputes. In any case, this latest bipartisan ruling on the legality of the individual mandate appears to be the middle ground that lines up with precedent and prevailing jurisprudence: the government can require economically favorable actions, so long as its requirement does not infringe on other rights.

A public option that would help provide coverage to those for whom the mandate might prove prohibitively costly might become a requirement, so that all persons receive equal treatment before the law. At present, the private healthcare sector is struggling to achieve anything like an economically favorable framework for providing universal care: one example is the experimental cancer drug Avastin, recently rejected by the FDA after several studies showed it had no proven benefit to patients but posed serious risk of side effects.

The drug cost as much as $88,000 per year per patient, and the drug maker offered a not very generous cost reduction plan, to just $57,000 annually for patients earning under $100,000 per year. After taxes, of course, that is almost the entire net income of someone earning that amount; nevermind the vast majority earning far less.

With so much upheaval in the still troubled US economy, and increasing talk among cost-conscious Tea Partiers that they bear no allegiance to the Republican party, the cost question in healthcare may soon become a right to life question, which is what so many reform-minded and patients’ rights groups have so long held it to be. It now looks increasingly unlikely the partisan/industry challenge to the nation’s health insurance reform plan will succeed.

And that means insurers have to plan more seriously for the coming changes, or they may face a deeper, more serious challenge: a challenge to their right to operate as insurers while actively investigating ways to avoid acting as insurers. Adaptation is a wiser long-term strategy for insurance providers, than having an unwinnable fight over their strained and unsustainable profit-making model. To compete in the new marketplace will mean being the best at providing top-quality open access to genuine health treatment and preventive care, at rates everyone can afford.